I don't think severing trade ties with Pakistan is the way to go.
The way to creating deterrents to Pakistani adventurism is to dangle the threat of trade barriers and exploit the leverage that comes from India market access to big Pakistani corporates or ultra-HNIs, say for example in the cement and real estate sectors, when the rich haraml<h*rs in their Army or Senate think about another Kargil.
Apart from that, I say we establish such a viable, ubiquitous presence through offshore accounts in Pakistan's financial markets- particularly in its energy and power sectors, its real estate sector and its broader financial services sector- that we are able to turn the screws on them hard, equity-wise and financial-lending wise, when it comes to deterring or imposing additional trade and economic costs from hostilities. That, of course, will mean strengthening the tax net and AML channels, but overall I think some Pakistani generals would mind a lot more if billions of their rupees were stuck in stalled property dvlpt. projects in India, than we would.